How much should a share of stock be worth for a firm whose earnings per share are $4 if the industry's average P/E is 11?

Name: How much should a share of stock be worth for a firm whose earnings per share are $4 if the industry's average P/E is 11?
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Question

Quizplus · Accepted Answer

The value of a share of stock can be estimated by multiplying the earnings per share (EPS) by the industry's average price-to-earnings (P/E) ratio. Here, with an EPS of $4 and a P/E ratio of 11, the share value is calculated as $4 * 11 = $44.

How Much Should a Share of Stock Be Worth for a Firm